The government of Ontario sees development of green energy generation sources as a strategy. Unfortunately, that laudable objective is largely undermined by the manner in which the McGuinty government has chosen to go about creating that capacity.
Quite simply, the process leading up to last week’s historic signing of a deal between the state-run power authority in Korea, multinational giant Samsung and the Ontario government, stinks. If the deal delivers on everything it promises in terms of wind and solar energy generation, job creation and benefits to Ontario steel companies, it might end up being good for the province. But that’s a big “if,” and the way it has been handled until now will still stink.
Back when he was energy minister instead of Toronto mayoral wannabe, George Smitherman set up a system designed to encourage Ontario companies to compete openly in green energy development. Called Feed-In Tariffs, the system would pay a subsidy to companies developing alternate energy sources. Developers would receive above-market rate subsidies of 13.5 cents per kilowatt hour for wind, and 44.3 cents for solar power.
Before he left office, Smitherman undermined the open competition he himself set up by offering preferential rates and access to a huge foreign company — Samsung. The deal actually pays the consortium a premium over and above the Feed-In Tariff subsidy. Not surprisingly, it was immediately condemned by other stakeholders such as the Association of Power Producers of Ontario and the Canadian Wind Energy Association, who were locked out of the deal and access to the generous subsidies the government will pay Samsung. Independent energy consultant Tom Adams put it this way: “We don’t know what’s so good about Samsung because it’s all been done in secret,” adding: “The guts of it is that the old rules about efficiency and competitive procurement, none of that applies any more.”
Those who defend the deal point out there are no domestic players with the capacity required to meet Samsung’s offer. But could a consortium of players have been competitive? Could one more domestic player have demonstrated its ability to grow capacity? We don’t know, because this happened entirely behind closed doors.
What we do have is the commitment from the premier that Samsung will invest $7 billion to build wind and solar clusters expected to generate 2,500 megawatts of power from green sources, and that 16,000 direct and indirect jobs will be created over six years, not all of them permanent.
That’s the message McGuinty wants and needs. He’s betting that the soundbite “McGuinty signs agreement that will see $7 billion invested in Ontario to create 16,000 new jobs …” will be what voters will remember, not the fact that the deal is shrouded in secrecy, excludes domestic players and will result in electricity rate hikes as Ontario electricity consumers pay up to $25 billion to a Korean multinational to run a near monopoly on the provincial energy market.
As we said, alternative energy generation capacity is a good thing for Ontario. Setting aside basic rules of openness, fairness and competitiveness is not good for anyone.